Sisyphean Challenge

Ever feel as though you aren’t getting anywhere and paying into that debt and it isn’t going anywhere? Do you feel as though you are never going to get out of the bondage of debt that gives you sleepless nights on how you are going to pay for groceries tomorrow? Times are definitely tough with high gas prices and the temptation to use credit sounds as an easy way to get by, but you must resist. You must stay focused on paying down those debts with any available funds you have. You might say, “Money is tight, and I don’t have extra for that!” but this attitude will only dig you deeper down and cost you big bucks if you don’t do this now. Find the money. Disconnect that cable, get a second job and skip out on that Starbucks coffee every morning. I know it seems tough but if you don’t get it under control, you will only be rolling that boulder uphill only to have it roll right back to the bottom.

Sisyphus was a King in Greek mythology that was punished for his deceitful acts towards Zeus and others. His punishment was to roll a huge boulder up a very steep hill only to watch it roll back to the bottom and forced to do it all over again for eternity. Can you imagine the frustration?

When you are trying to eliminate debt, sometimes it can feel like that boulder is getting bigger and heavier with every trip up . There are times when those balances just don’t seem to be lowering. Stick to it and keep your eye on the prize of financial freedom. The good news is that your days of pushing a boulder don’t have to be an eternity. The choice is yours on how many trips up you will make to the top. Keep in mind that one day you will push it up and over for the last time, then you will look down and celebrate a victory which very few will ever achieve.

Add an Arm and Leg to that Car Payment

Before you go out and get financing to buy that new car, furniture or even stereo you should always know what it's REALLY gonna cost you. Sure it says $20K but how much will it run you in the long run. That funiture might be on sale for ONLY $2K, but be sure that they will get their money in financing. In fact, Sears makes more money on their financing services than they actually do on the products they sell. That is why retails stores usually ask if you would like to put it on their card because it brings in BIG MONEY. Car dealerships used to just go through banks for financing but then they discovered the beauty of compound interest...That's interest that just keeps piling on to itself. Compound interest can be what makes you rich or puts you in the poor house making payments for 6 years on that Pinto.

Regardless how bad you want that new leather couch or nice race car to cruise around with let's look at some numbers. BEWARE, you might not like what you see but I do it in the hopes that you will open your eyes and save your money.

Let's start with a $20K car. Now picture this bad boy. It's got all the extras. It's got the racing seats and 20-inch rims and bluetooth sound system. It's flawless and a major neck-breaker. When you first saw it at the dealer, it was just calling your name. The salesman says, it's only 20 thousand dollars, way below what they are charging across the street. Plus, we have all these rebates. Here you are, a first time buyer with not-so great credit. The salesman says he can get you very low payments if you just sign on for 6 years. Six years isn't anything right, plus this car is worth every penny. Here are the numbers.

On a $20K loan at CRAZY 15% interest for 6 years, your monthly payment will be $422.90 At the end of your loan, you would have paid $20K PLUS $10, 448.82 IN INTEREST. The total for this car is $30,448.82 Here is the chart for it.

Click here for the Amortization Chart

As you can see, you don't actually start paying more on the car than on interest until the 19th month. That's over a year and a half...and that's by only a few bucks. Can you believe you are going to pay over $10,000 in interest... that's another small car!! Just imagine how much you could save if you got a cheaper car.

When I wrote about making mistakes yesterday, I was serious. I've made this mistake. I've been there, done that, and lost out on thousands. Please don't let this be you. Think twice next time you want to finance something.

As an extra, I added a amortization chart that you can fill out everytime you want to know how much you are going to REALLY pay for something on credit. Just scroll all the way to the bottom and fill out the info.

Trust Me, It's Hot!

I have yet to figure out why it is in our nature to learn the hard way. If someone tells you that coal is hot, would go you and touch it? I hope not.... and if you do, you are a Bonehead! One of the reasons why I write is blog is to tell you that I've touched coal. I've been burned and made plenty of mistakes. Mistakes that have costed me thousands of dollars. I'm sure we have all made mistakes that we can tell somebody about in the hopes of trying to prevent them of doing the same. The sad part is most of the time they won't listen and continue the never-ending cycle of money going down the drain. For some strange reason I was watching the The Ellen DeGeneres Show this week and she had Will Smith as a guest. One thing that I loved that he said is how there isn't a problem out there that someone in the world hasn't encounted and written a book about. It's true and if there isn't a book written about it, someone knows how to fix or avoid this problem. One of the good things about having older siblings is that it gives them the opportunity to make losts of life's mistakes, thus allowing you to learn from them. That's how it's supposed to work. You learn from them and your younger ones learn off of you. Too bad this isn't a more perfect world so we must all learn in our own way. Sometimes the best way to really believe that the coal is hot is to get burned.